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TMI Blog2023 (9) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... arubeni. The documents of payment show that appellant has paid only the amount as per contract. The ground put forward by the department to reject the transaction value declared for some items cannot be accepted when the amount fixed is for the entire project import. In the case of AGARWAL INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS, VIZAG [ 2005 (8) TMI 225 - CESTAT, BANGALORE] the Tribunal held that the transaction value arrived at purely on commercial considerations based on contracts, transaction value not to be rejected unless established with reason. Delay in passing the assessment - HELD THAT:- There is considerable delay of more than 13 years after the date of report of DRI (8/2006) till the order of finalization (27.09.2019). The department has not been able to explain this delay. The higher forums have held that in such situations, in unreasonable delay in adjudication / finalization of assessment the show cause notice itself is liable to be quashed. The finalization has happened after 15 years of provisional assessment which is extremely inordinate delay, and also against the instructions issued by CBIC as to finalization of Project Import Assessments The department has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Project was registered under Project Import for concessional rate of duty of goods falling under CTH 9801. The imports under the bills of entry were assessed under provisional assessment as per Project Import Regulations, 1986. The list of items to be imported as per the above letter of Government of Tamil Nadu is as below : TABLE A Sr. No. Description of Goods CIF value (Japanese Yen) CIF value (USD) 1. Combustion Turbine System 6,64,68,32,877 2. Steam Turbine System 2,21,56,10,59 3. Sea water System / Desalination System 1,18,62,835 4. Balance of Plant 2,63,26,406 5. Electricals & Control Equipments 84,52,403 6. Fuel System 6,53,429 7. Marine Plant & Equipment (Other than SPM) 46,92,932 8. Single Point Mooring System 50,12,444 9. Generator 71,13,534 Total 8,86,24,43,836 6,41,13,986 3. M/s. PPN had imported the above mentioned goods from M/s. Marubeni Corporation, Japan (hereinafter referred to as M/s. Marubeni - the appellant in Appeal C/40361/2021). M/s. Marubeni being the executor of Erection, Procurement and Commissioning (EPC) had placed orders with other overseas sub-contractors and the goods arrived at Chennai Port from different load por ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods supplied to appellant sourced by M/s.Stone & Webstar through M/s.Marubeni. On such final assessment, the original authority vide order impugned herein held as under : "(a) I order finalization of all the Bills of Entry under Section 18 (3) of the Customs Act, 1962. (b) I confirm the demand of Rs. 9,54,10,789/-(Rupees Nine Crores Fifty Four Lakhs Ten Thousand Seven Hundred and Eighty Nine only) towards differential duty. (c) I demand Rs. 2,14,88,442/-(Rupees Two Crores Fourteen Lakhs Eighty Eight Thousand Four Hundred and Forty Two only) for the Single Point Mooring System towards differential duty. (d) I order appropriation of the Cash Security Deposit of Rs. 1,00,00,000/-(Rupees One Crore only) towards the above mentioned differential duty. (e) I levy a penalty of Rs.1,00,00,000/-(Rupees One Crore only) under Section 112(a) of the Customs Act, 1962 on M/s. PPN Power Generating Company Private Limited. (f) I levy a penalty of Rs. 1,00,00,000/-(Rupees One Crore only) under Section 112(a) of the Customs Act, 1962 on M/s. Marubeni Corporation." 8. The original authority vide Order-in-Original No.71671/2019 dt. 27.09.2019 thus confirmed differential duty demand on M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Counsel to the Commissioner of Customs requesting them to finalise the assessment. 8. 27.03.2004 Letter from the Appellant's Counsel to the Assistant Commissioner of Customs requesting him to finalise the assessments 9. 17.03.2004 Letter from the Appellant to the Assistant Commissioner of Customs requesting him to finalise the assessments 10. 17.05.2004 Letter from the Appellant to the Assistant Commissioner of Customs requesting him to finalise the assessments 11 27.05.2004 Letter from the Appellant's Counsel to the Commissioner of Customs requesting him to finalise the assessment. 12 28.05.2004 Appellant's Counsel Submissions in Reply to the objections raised by the Department. 13 14.07.2004 A personal hearing was conducted. The Assistant Commissioner entertained a doubt as to the admissibility of Single Point Mooring and other marine equipments for assessment at concessional rate. 14 13.08.2004 Letter from the Appellant's Counsel to the Assistant Commissioner of Customs requesting him to finalise the assessment. 15 13.08.2004 Letter from the Assistant Commissioner of Customs to the Appellant's Counsel. 16 27.09.2004 Letter from the Appellant's Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acie noting that the adjudication proceedings were belated, directed the appellant to participate in the adjudication proceedings. However, some of the directions of the Learned Single Judge were modified which enables the appellant to release the bank guarantee executed by them. The Division Bench granted liberty to raise all points before the adjudicating authority. 27 27.09.2019 The Assistant Commissioner heard the appellant on 19.2.2019 and passed the order-in-original No.71671/2019 on 27.9.2019 confirming whatever was stated in the notice dated 22.5.2018 except levy of interest. 28 23.03.2021 Aggrieved by the said order-in-original dated 27.09.2019 the appellant filed an appeal before the Commissioner of Customs (Appeals) and the Commissioner, vide the order-in-appeal Seaport C.Cus.II No.134/2021 dated 23.03.2021 has dismissed the appellant's appeal. Aggrieved by the said order-in-appeal the appellant has filed appeal no. C/40376/2021 before this Hon'ble Tribunal . 29 19.03.2021 Meanwhile, the Department had filed appeal before the Commissioner of Customs (Appeals) on the ground that the original adjudicating authority had not imposed fine while passing the adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l High Court, in the appellant's case which was filed for directing the department to finalize the assessment, observed in judgement 30.11.2018 that 'though the case may be one of investigation done by DRI, yet final assessment should be done within a reasonable time. In the opinion of the Central Board, 6 months' is reasonable time under normal circumstances. In our prima facie view, period of 15 years cannot be considered as a reasonable time. But we refrain from rendering any finding on the said issue. In fact, the learned Single Bench also records that the respondents have taken enormous time in completing the provisional assessment.'. there is no evidence adduced by the department that M/s.Marubeni has collected any amount from the appellant over and above, the contract value. The amount fixed in the contract is for the entire goods. M/s.Marubeni had procured some items from various other suppliers and sourced it to the appellant. For such supply, the overseas suppliers had raised invoice on M/s.Marubeni. Though goods were supplied to appellant from such overseas suppliers directly, the invoice on appellant is raised by M/s.Marubeni. The value of some goods obtained by M/s.Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered with PPN and further the total sum was within the overall EPC cost. 15.4 In terms of the contract entered between PPN Corporation and M/s.Marubeni, payments were to be made on milestone basis as per the agreed terms of payment. PPN had effected the payments as per the invoices raised by M/s.Marubeni on achievement of the prescribed milestone and as per the contract. It is reiterated that the same reflects the actual transaction value in respect of the supplies made by M/s.Marubeni to PPN as per the contract 16.1 The Transaction Value has to be accepted in the present case as per the Customs Valuation Rules and hence no penalty is imposable. To support this contention the following arguments were put forward: * As per Section 14 of the Customs Act, the value for the purposes of calculating customs duty payable shall be the transaction value i.e. price actually paid or payable for the goods exported to India. In the present case, the transaction value declared is the price actually paid by them for the subject imports * The product imported is the very same product mentioned in the Contract. Even the specifications of the imported product are exactly the same as the specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with Customs authorities. 16.6 Further, Para 2 of Chapter 5 of the CBIC's Customs Manual states that, "Project imports is an Indian innovation to facilitate setting up of and expansion of industrial projects. Normally, imported goods are classified separately under separate tariff headings and assessed to applicable Customs duty, but as a variety of goods are imported for setting up an industrial project their separate classification and valuation for assessment to duty becomes cumbersome. Further, the suppliers of a contracted project do not value each and every item or parts of machinery which are supplied in stages. Hence, ascertaining values for different items delay assessment leading to demurrage and time and cost overruns of the project. Therefore, to facilitate smooth and quick assessment by a simplified process of classification and valuation, the goods imported under Project Import Scheme are placed under a single Tariff Heading 9801 in the Customs Tariff Act, 1975." 17. It is thus submitted by the learned consultant that the declared price is the true transaction value of the imported goods. The levy of duty should be on the transaction value declared and rejection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iece of evidence for rejecting the transaction value. No new material has been referred to or relied upon in the impugned letter, for valuation purposes. 22. It is submitted, that the finalization, issuance of show cause notice and adjudication of the show cause notice ought to have been concluded within a 'reasonable period' of time. Apparently, the finalization of assessments after the lapse of more than 15 years from the date of the provisional assessment cannot be considered as a reasonable period by any yardstick. The Appellant has been incapacitated and are not in a position to defend the case in view of the passage of time. 23. Thus, the finalization of assessment now proposed to be undertaken after inordinate delay is bad in law and the proceedings initiated vide the SCN is liable to be quashed. Reliance for the same is also placed on the following cases - a) Universal Generics Private Limited vs. UOI reported in 1993 (68) ELT 27 (Bom) b) Shree Vallab Glass Works Ltd. Vs. CCE reported in 1999 (112) ELT 619 (T) c) Government of India v. Citadel Fine Pharmaceuticals - 1989 (42) E.L.T. 515 (S.C.) d) E.C. Bose Co. Pvt. Ltd. v. Union of India - 1992 (58) E.L.T. 432 (Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) Collector of Central Excise vs. H.M.M. Limited, 1995 (76) ELT 497 (SC) b) Commissioner of Central Excise, Aurangabad vs. Balakrishna Industries, 2006 (201) ELT 325 (SC) 31. Further, even in the event there has been any infraction of law, the same is completely unintended and bona fide and without any intent to evade duty. It is settled law, inter alia, by the judgment of this Hon'ble Court in Akbar Badruddin Jiwani vs. Collector of Customs, 1990 (47) ELT 161 (SC), that any technical or venial breach of the law without intention to evade duty does not invite the levy of penalty. Reliance is also placed on Hindustan Steel Ltd. vs. State of Orissa, 1978 (2) E.L.T. (J 159) (SC). 32. Moreover, the case involves interpretation of the provisions of the Customs Act. As already submitted, the Appellant acted in bonafide belief. It has been held by the Hon'ble Tribunal in a large number of cases that no penalty is imposable in cases involving interpretation of the statutory provisions. Some of these cases are as under: a) Auro Textile vs. Commissioner of Central Excise, Chandigarh 2010 (253) ELT 35 (Tri.-Del.); b) Hindustan Lever Ltd. vs. Commissioner of Central Excise, Luckno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason for such enhancement is that from investigation conducted by DRI, it was revealed that the goods were procured by M/s.Marubeni from M/s.Stone & Webstar at a higher price than that shown in the invoice raised by M/s.Marubeni on the appellant. The allegation thus raised in the SCN is that M/s.PPN has deliberately undervalued the goods to evade customs duty and M/s.Marubeni has abetted the case. 39. On perusal of Project import Contract it is seen that the amount fixed by the parties to the contract (M/s.PPN and M/s.Marubeni) is for the entire contract which includes goods which have ben sourced from vendors other than M/s.Stone & Webstar. The appellant has to pay in total the contract value. It is this value that has been split into various segments. M/s.PPN has to pay only this contract value and need not pay any amount higher even if M/s.Marubeni has procured some goods at a higher price. This is clear from the agreements which reads as under : "Scope of Work The scope of work under this Agreement (the "Foreign Supply") shall cover the supply and delivery of all equipment and materials of non-Indian origin as contemplated by the General Terms and Conditions. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied at the contracted rate. However, on the same date of importation, the same ship also carried the same goods meant for other parties. In those cases, the prices were different. For example, in a particular case, the contracted price is 450 USD per MT but on the same date, for the same goods, there is another consignment where the price is 500 USD. The case of the Revenue is that that the correct value for purposes of assessment would be only 500 USD as it represents the correct contemporaneous value. Hence, the transaction value declared by the importer was rejected. The lower authority demanded differential duty. The Commissioner (Appeals) upheld the order of the lower authority. This Bench had an occasion to deal with similar issues. In the case of Andhra Sugars Ltd. v. CC, Vizag, by Final Order No. 976/2005, dated. 22-6-2005 [2006 (193) E.L.T. 68 (Tribunal)], a majority view was taken that transaction value can be rejected only if any of the situations mentioned in Rule 4(2) of the Customs Valuation Rules, 1988 warrant the same. While taking such a decision, the Bench followed the decision of the Apex Court in the case of Eicher Tractors Ltd. v. CC, Mumbai - 2000 (122) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is the sole consideration for the sale or offer for sale. Therefore, when the above conditions regarding time, place and absence of special circumstances stand fulfilled, the price of imported goods shall be decided under Section 14(1A) read with the Rules framed thereunder. The said Rules are CVR, 1988. It was further held that in cases where the circumstances mentioned in Rules 4(2)(c) to (h) are not applicable, the Department is bound to assess the duty under transaction value. Therefore, unless the price actually paid for a particular transaction falls within the exceptions mentioned in Rules 4(2)(c) to (h), the Department is bound to assess the duty on the transaction value. It was further held that Rule 4 is directly relatable to Section 14(1) of the Act. Section 14(1) read with Rule 4 provides that the price paid by the importer in the ordinary course of commerce shall be taken to be the value in the absence of any special circumstances indicated in Section 14(1). Therefore, what should be accepted as the value for the purpose of assessment is the price actually paid for the particular transaction, unless the price is unacceptable for the reasons set out in Rule 4(2). [Als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present cases, more so, when admittedly there were drastic fluctuations in the international price of the commodity involved. We are, therefore, of the opinion that the revenue was not justified in rejecting the transaction value declared by the respondents in the invoices submitted by them. 14. For the foregoing reasons, we do not find any merit in these appeals. All the appeals are dismissed accordingly, with no order as to costs." 41. The appellants, M/s.PPN as well as M/s.Marubeni have argued on the ground of delay in passing the assessment. As per CBICs Custom Manual-Chapter 5 - deals with Classification / Assessment of Project Imports, Baggage and Postal Imports. Para 5 lays down instructions for Finalization of assessments which reads as under : "5. Finalisation of contract: 5.1 Under Regulation 7 of the PIR, 1986 the importer is required to submit, within three months from the date of clearance of the last consignment or within such extended time as the proper officer may allow, the following documents for the purpose of finalization of the assessment: (i) A reconciliation statement i.e. a statement showing the description, quantity and value of goods imported a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment the show cause notice itself is liable to be quashed. 43. The Hon'ble High Court in the judgement dt. 30.11.2018 in Writ Appeal No.2611/2018 filed by M/s.PPN observed as under : "7. In our considered opinion, though the case may be one of investigation done by the DRI, yet final assessment should be done within a reasonable time. In the opinion of the Central Board, 6 months' is reasonable time under normal circumstances. In our prima facie view, period of 15 years cannot be considered as a reasonable time. But we refrain from rendering any finding on the said issue. In fact, the learned Single Bench also records that the respondents have taken enormous time in completing the provisional assessment. In such circumstances, we are of the view that some relief should be granted to the appellant especially when they have effected cash deposit of Rs.84 lakhs, when they have imported the products and furnished Bank Guarantee of Rs.13.77 Crores. The Bank Guarantee has been kept renewed since then and according to the learned counsel for the appellant, bank charges itself is more than Rs.2.35 crores. Assuming without admitting upon adjudication of the show cause notice, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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